FINANCIAL FOCUS: Smart financial moves for women

Published: Wednesday, March 5, 2014 at 03:26 PM.

On Saturday, we observe International Women’s Day, a celebration of women’s economic, political and social achievements.

Still, there is progress to be made. Here in the United States, one of women's biggest challenges may be to gain the resources they need to enjoy a comfortable retirement.

Women, your first move should be to recognize potential barriers to attaining financial freedom. A “wage gap” between women and men still exists: Median earnings of full-time female workers are 77 percent of the median earnings of full-time male workers, according to the U.S. Bureau of Labor Statistics. Also, women drop out of the workforce an average of 12 years to care for young children or aging parents, according to the Older Women’s League, a research and advocacy group. This time away from the workforce results in women receiving lower pensions or accumulating much less money in their employer-sponsored retirement plans.

To give yourself the opportunity to enjoy a comfortable retirement lifestyle, consider these suggestions:

• Boost your retirement plan contributions. Each year, put in as much as you can afford to your traditional or Roth IRA. A traditional IRA grows tax deferred, while a Roth IRA can grow tax-free if you meet certain conditions. Also, take advantage of your employer-sponsored, tax-deferred retirement plan, such as a 401(k), 403(b) or 457(b). At the very least, contribute enough to earn your employer’s matching contribution, if one is offered. And every year, if your salary increases, try to boost your contributions to your retirement plan.

• Consider growth investments. Some evidence suggests that women may be more conservative investors than men. In other words, women may tend to take fewer risks and pursue “safer” investments. But to help build the resources you will need for a comfortable retirement, consider growth-oriented vehicles in your IRA, 401(k) and other investment accounts.

• Talk to your spouse about Social Security. If your spouse starts collecting Social Security at age 62 (the earliest age of eligibility), monthly benefits will be reduced — perhaps by as much as 25 percent. This reduction could affect you if you become a widow, because once you reach your “full” retirement age (likely 66 or 67), you may qualify for survivor benefits of 100 percent of what your deceased spouse had been receiving. And if that amount was reduced, that’s what you’ll get.

On Saturday, we observe International Women’s Day, a celebration of women’s economic, political and social achievements.

Still, there is progress to be made. Here in the United States, one of women's biggest challenges may be to gain the resources they need to enjoy a comfortable retirement.

Women, your first move should be to recognize potential barriers to attaining financial freedom. A “wage gap” between women and men still exists: Median earnings of full-time female workers are 77 percent of the median earnings of full-time male workers, according to the U.S. Bureau of Labor Statistics. Also, women drop out of the workforce an average of 12 years to care for young children or aging parents, according to the Older Women’s League, a research and advocacy group. This time away from the workforce results in women receiving lower pensions or accumulating much less money in their employer-sponsored retirement plans.

To give yourself the opportunity to enjoy a comfortable retirement lifestyle, consider these suggestions:

• Boost your retirement plan contributions. Each year, put in as much as you can afford to your traditional or Roth IRA. A traditional IRA grows tax deferred, while a Roth IRA can grow tax-free if you meet certain conditions. Also, take advantage of your employer-sponsored, tax-deferred retirement plan, such as a 401(k), 403(b) or 457(b). At the very least, contribute enough to earn your employer’s matching contribution, if one is offered. And every year, if your salary increases, try to boost your contributions to your retirement plan.

• Consider growth investments. Some evidence suggests that women may be more conservative investors than men. In other words, women may tend to take fewer risks and pursue “safer” investments. But to help build the resources you will need for a comfortable retirement, consider growth-oriented vehicles in your IRA, 401(k) and other investment accounts.

• Talk to your spouse about Social Security. If your spouse starts collecting Social Security at age 62 (the earliest age of eligibility), monthly benefits will be reduced — perhaps by as much as 25 percent. This reduction could affect you if you become a widow, because once you reach your “full” retirement age (likely 66 or 67), you may qualify for survivor benefits of 100 percent of what your deceased spouse had been receiving. And if that amount was reduced, that’s what you’ll get.

Talk to your spouse about this issue well before it’s time to receive Social Security. You may also want to talk to a financial advisor for help in coordinating survivor benefits with your own Social Security retirement benefits.